Transcripts For CNBC Squawk Box 20170320

And he takes it off and gets looks down and dirty. Working hard. And giving people information, tradeable stuff. What you come here and suddenly im being respectful towards you. I enjoy you feel comfortable enough to say take the jacket off. And i said why are you not respectful to waner and he said because im not. Standing up for him. And hes probably watching right now. I bet he is. You know what he loves to do . Tweet about officiating. He loves that. He also loves that duke is knocked out of the tournament. He hates dock. He just doesnt like duke. He does. I had North Carolina. I got 10 out of 16. And i still have North Carolina. I didnt think i was going to have North Carolina. They almost blew that game. Hows yours . Not too good. Not too good for msg. Thats not what they wanted. Youve got wisconsin florida in one game and baylor in the other game. South carolina, i dont think thats what msg wanted. Theyll be okay. Ucla kentucky, thats going to be a good game. Xavier, you see them . Who are they again . I dont know they beat Florida State by 40 points. Lets take a look at the u. S. Equity futures. Last week the markets were slightly higher for the week. You can see slight deshriclines. S p futures look like they would open 4 1 2 points. Overnight in asia, the nikkei was closed in japan for first day of spring. Thats why the japanese market was closed. The hang seng market was up and in europe, this morning and some of the early trading youre going to see already that there are downward arrows. The ftse 100 is down by quarter of a percentage point. And interesting number to watch. 10 year yielding 2. 499 and last week the 10year yield picked up above what the dividend yield would be for the s p 500. Many people starting to relook at some of these issues. Got to read this bond yield shift. 249 looks like another 1 gdp. It was just that the dividend yield for the s p 500 is below 2 1 2. Capital flows. All right. Got a couple of elections in europe. Thats true. Thats right. He still thinks le pen has a chance. No. Its interesting to see mark say it. Are you going to watch that . There is a big one on. Hes like a former investment banker. He might be 100 times better, even if it is him. Tepor said that . Right. He said either one would be better than the current. Take a very quick look at crude oil prices. It picked up a little bit of ground after losing 9 the week before. Here are several of the big stories that were watching. Not all. Theres a lot of them. Going to all die in a horrific nuclear arm gedden. I dont even think thats in here. Good morning though everybody. Happy monday morning monopo. Anyway, g20 finance ministers have dropped their joint pledge to avoid trade protectionism. And the u. S. Treasury secretary did not endorse the groups long standing commitment to tariff free trade. We do have a new administration and we do have a different view on trade. But again i want to emphasize that view is making sure that trade works for the American Workers and works for our counterparties. That its a good deal for both. Yeah. And while they argued about trade, the g 20 ministers backed their long standing warningsing against competitive devaluations and disorderly Foreign Exchange markets and secretary of state Rex Tillerson wrapping up two days of meetings. Convrsations between tillerson and president g appeared to strike a cordal tone with him expressi expressing. He only made little progress coming towards an agreement on the north Korea Nuclear crisis. A lot of people would like china to get a little bit tougher and some people wonder whether they can. Tillerson said that. I think they do this though. They do and they dont. I mean, i think they have tried to push but i think theyve been growing theyve had growing frustrations because they have not had the control they thought they might over north korea. One way or the other this administration is going to have to deal with north korea. And probably it comes through china. Through china or strike. Proactive strike now that hes trying out new missiles that could reach the west coast. And he looks happy. They have pictures of him as the successful launches were occurring and hes happy. But he looks demented. Im afraid to say that. Historically we come out on the right side of these conflicts. Not that you want one but generally we do okay and i think well do okay on this one. World only once. So we need to be 100 . And if you dont bet against the world ending, you usually lose. And ibm and a unit of chinas group are teaming up to bring more Cloud Services to chinese companies. A lighter week ahead for economic data. On wednesday well begin february existing home sales. And on friday its the february durable goods. Big names reporting earnings including general mills, lemar, fedex, gamestop. And we have an interview coming up, minneapolis fed president joining us at 8 30 a. M. Eastern time this morning. And later, the president of the Philadelphia Fed Patrick Harker will be joining squawk on the street. The house intelligence committees going to hold its first public hearing on russia and fbi director james comey will be testifying before law makers. Ammon, obviously a lot of questions. You think well have answers by the end of today . I dont think we will as many as we want. James comey going to be in the hot seat. Hes one of several people who are going to be testifying today. But hes the one a lot of americans want answers from particularly on whether theres an investigation into Donald Trumps campaign and any potential collusion or interaction that the campaign had in terms of the 2016 election. He has refused to say whether or not there is such an investigation. Whats he going to say on that front . And theres the question of Donald Trumps assertion that president obama wire tapped trump tower last year. Will comey be asked about that . Will he publicly refute the president . Theres been refuting that he privately asked to push back on that. Today might be the day for that. In terms of the chairman and the Ranking Member of the committee was asked on fox news over the weekend whether or not there was any efrtsvidence of cuclusion between the Trump Campaign and the russian government. Ill give you a very simple answer. No. No evidence of any collusion . No. The ranking democrat on the committee went further. Obviously theres a split. Take a look at what he had to say. There is circumstantial evidence of collusion. There is direct evidence i think of deception. So a split there between the it republicans and the democrats as you might imagine. Its a political season in washington and were going to get that throughout the day today. As for his part, President Trump has a meeting with bill gates in the white house today. Well wait and see what the agenda is for that as well. A lot going on in washington today. Its weird. Yes. It is weird. The circumstantial. All of it. You get a clear no and then you get a i dont know, mayby circumstantial. Circumstantial just sounds thin. If youre the democrats. Youre saying implicitly that theres no actual evidence. I hope, to avoid saying no we dont see anything you throw in the circumstantial with the thats almost like saying well, theres some smoke and therefore, there must be a fire. I dont know. Sglm munez said over the weekend its clear that the russians were medaling in the election but theres no evidence of collusion. That is that the russians could have been medal without the trump folks having anything to do with it. But they didnt conspire and plot with the russians, which would be a dramatic escalation of that scandal. Wrun countrys medaling is another pushing forward its own interests. Like telling british voters theyre going to be at the end of the q and making sure netanyahu doesnt get elected in israel. Look, its one thing to do it overtly and in public and say it on national television. Its another thing to do it through all sorts of covert and not visible means. That gives it a much different feel. Too bad all those emails existed with all the todry and distasteful things going on. Comments, everything else. Shining a light on them. Thats just showing us what was going on. The other question for comey today is what does he say about Donald Trumps assertion about being wire tapped by president obama. Will he publicly say the president was wrong on that . Well wait and see what he says. What was it about a month ago that he said it, the leaks dried up. There hasnt been one additional shoe to drop on the collusion side of things. Whats your point john mccain said this is a centipede and theres a lot more shoes to drop. Lets get back to the markets. I guess have some effect on the markets. Chief economist and managing director and cnbc contributor. Our guest host, jacketless joe turno. Investment partners. When you see you knew the 10 year was going back under 2 1 2 . I dont know if i knew it was going back under 2 1 2. Joe talked about capital flows. They have been very short tenure notes, assuming the fed would be more aggressive or sell its Balance Sheet. Right now the markets diskoupting another 1 1 2 hikes. Given the inflation is. Given the markets uncertainty that trump will get things through. 250th makes sense. My guess is it will push up higher, closer to three by year end. But given where inflation is i didnt think we needed to digest what was it a 40 rise in yields . Its still only 2 1 2. So they say thats even more. So we have to digest that little incremental move . That takes time to consolidate. If youre trading a book, obviously the duration is such that a 40 move is large. But in terms of corporates and household s its sort of irrelevant. If rates are rising because people are more confident in the out look, thats a good thing. Since the election youve seen pretty much every measure of sentiment improve. Butted we cant get a First Quarter gdp print. Hes done work. Steve highlighted this. Did a very good job. Even with all this. I think well be above 1 . Whether its 1 or 150 or 180. Im at two at the moment. We adjust and theres clear seasonality. The bureau of analysis looked at it. Thats why nobody really cares because they werent worried about q 1 and well get a snap back in q 2 or q 3. Concerns last week. You had the third biggest out flow. I think 4 billions. Its more oil. I think people are worried about oil. The energy still a very big piece. And the markets get nervous. Joe talked about the next 50 basis points on 10s if it were to happen, probably would hurt high yield a bit more. But i get the sense from talking to investors that were just sitting waiting. What happens with health care . If the ahca goes through, then youll see the market get more excited about the tax cuts and more aggressive fed and rates gradually moving up a bit more. Whats your twitter handle . luvoer lunomics. When we do this from now on, ill be joe squawk. You can be taranova joe. How about joe jacket. Youre the joe with the jacket. Yesterday was st. Josephs day. In 3rd grade there was a joe, a joseph, and a joey. Marys husband, joe. St. Joseph. Only one . There is . Dam good name. Solid if youre catholic. You cant go wrong if youre naming your kid that. Just not joey. Thats a kangaroo. And stick around. Thank you though. What was it again . luvornianomics. Who came up with that . My wife. Then you love it. I love it. Great name. When we come back, what did you do this weekend . Was it all about march madness . Did you see your brackets get busted by the big upsets or was it all about beauty and the beast. But first check out this day in mystery. History. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back to squawk box tributes pouring in for the late chuck barry. What if he never lived . I dont know. Passing away at the age of 90. Mick jagger saying your music is ingrained inside us forever. And you just wonder. Because theres a lot of new music, obviously. But if you listen to music, you hear songs and oh, yeah. These songs are 35 and 40 years old that we hear. Theyre iconic. Theyre just ones that i know that song. And we havent really come up with anything. Everything builds, builds. But but with his passing you could introduce the kids to the music because theyre curious. I mean you think about the big band era. There wasnt anything close. Boogie woogy bugal boy and it inspired all the guys. Paul mccartney. John lenin. Be much poorer. We would be. So whos movie is this . This was disney. It was a Huge Box Office debut for beauty and the beast. The live action movie raking in 1 170 million this weekend. The movie stars emma watson and dan stevens. This is the latest blockbuster for disney who had the sequels to guardians of the galaxy and of course Star Wars Episode 8 in december. I was there. Lots of people filing in. It was playing nonstop in the movie theater. So dizmy was lucky enough to grab that novel because it was written in 1740. No. But if you ask any of the girls that were there, they did it up. Al. A 90 stock and they all believe the days have past. Pumping up again. Not all time highs. No. People that did get negative on it, i mean espn is hurting disney. But the parks just like universals parks are able to print money. Thats true. You probably have somebody today about this. The sweet 16 is set. The it chief of sports side sb nation what has not surprised me is that anything could han at any time but and i see it more and more. Seton hall almost beat arkansas and arkansas really could have be beaten North Carolina. Is nothing mg really good . Michigan is really good. Its the Third Straight time theyve outed North Carolina out of the tournament. Michigan s on a heck of a run. This is their sixth straight win. Only at high level. So i didnt take her to go that far. Im sorry. But so how about xavier . Almost 30 points over Florida State . They were people were picking in the first round and they a stuck around. They lost one of their best guys. Exactly. Chris mack is a wonderful coach and xaviers win was ntd everybody manufactureses favorite. 11 over six maryland. So whos your dream final four . Wisconsin looks great, too, right . Im a big fan of wisconsin. Nigel hayes, if he goes strong to the hole on the baseline, his spin move is basically unstoppable. Id like kentucky to come out against ucla. That should be a barn burner. Two of the most efficient offerenseoffe offense. I love kansas to come out of that region. Gonzaga is an interesting one because usually this is the time when everybody jumps off the gonzaga band wagon but they have the best defense that program has ever had. And the number two rated offense in the country. So theyre solid at both ends of the ball. Joes already getting flak from twitter people that youre throwing shade because youre so noerk centric. No villanueva. Thats not that is one of the big heart breakers is that everybody was speck reulating that he was gearing up for this maech. There could be some great final match ups though. They had nine and theres only one left, North Carolina. And they beat each other fairly well in the conference. The seam thing you saw. You can wear. No ones left. There was one guy who got 31 out of 32. Made it all the way to the South Carolina upset and hes the one who won the hundred thousand. He works on a plant. But the beener of the within hundred thousand for getting the closest bracket of all employees works for one of the precision plants in west virginia, i think. Nobody won again. Too bad. But for the excitement it builds, i think he would like to see that. Chump change which is why hes the richest man in the wuld. Frrsz. He was watching every game waiting to see what happens. I mean, he was really into it himself. Im proud i have 10 of 16. Is 10 of 16 any good . Its excellent. Really . Yes. I have nine of 16. Remember he said alphabetically . I dont even show up in the pool because i am in the wrong place. You do have kentucky. I have kentucky to win it all. I like john. Hes a good man. I filled out three brackets and i have a player poij eer po and a 64 rank em. I went with kentucky. You did . Yes. Vegas is going congragau 51 odds. Thank you. We should mention that Nbc Universal tae why right now the market could see a surge and it is officially spring as of 6 29 eastern time. Yes . Please repeat the objective. Thrivent mutual funds. Managed by humans, not robots. Before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds. Com. Oh. Ncome on. Och method whats going on here . You know how Ge Technology allows us to fix problems before they. They slow production, yeah. Well, no more catchy business acronyms. Wait, we dont need to smooch . Im sure we can smooch a solution we just need to hover over the candice, problem until. Just let it go. Hey, sorry im late for team building. Smoooooooch that felt right. Whats wrong with you . Hes so trusting. Welcome back. Youre watching squawk box live from the Nasdaq Market site in times square. Dont listen to keecoldplay. I like coldplay. Really . I do. Really . Good warm up music. Really . So you like listening to coldplay . For the youth hockey, its good warm up music. Thats a good reason. Equity futures i like that you stand up to him. Heres equity futures down 240. But the jackets off. Theres some cupeling going on with their apartment. Whose . Gwen and more conscious uncupeling. The futures are awful. Does comey effect the markets . Depends on what he says. Look, yes. I dont know. I think sauce nl is tough to make. Im not convinced this is going that badly pch i think it will go to the senate and be able to hammer something out but you would think nothing is happening. The gallop pole is 37. And the more the media hits and hits and hits. Hes had a huge impact on the election twice. The regulation is very difficult to see but the market clearly likes the deregulation. Small business optimism. Its kienld of invisible. But its applauding the move towards deregulation. See how much Political Capital is being spent on whether its immigration or whatever it is and if it starts running dry, you can see that start to feedback because everybodys koupting on tax reform which cant happen until repeal and replace. Many have argued rilts not there but theres a policy under the market. For seven years obamacare approval never got above 42 , never even to a plurality. 53 approve, 53 disprove. So as youre trying to fulfill this campaign promise, suddenly when i dont know if it makes sense and its actually not imploding and i saw on some of the weekend shows. Thats a false narrative that somethings going wrong with obamacare. The fanyou can say its all all bad. Whatever it is, youre going to find exceptions to the rule thousandther side. Health care providers pulling out of certain markets and other people who say im not going to be able to take care of anything wout this. And ted cruz said premiums continue to sore then its yours. In total deals volume remains well below the prior cycle peeks. Some signs that an mna surge could be upon us. All the pieces are really coming together and even though last year was a nominal record, it was only equivalent to 2007. So as a percentage of gdp, its trailing well with lined prior cycles. Obviously very high stock and bond prices and the receptivety is a big show. And its usually an imput to more deal making. Obviously the regulatory picture hard to know how it breaks industry by industry. And its going to tilt in the direction of ceos trying deals, even if they dont know the full rules of the road. So in this cycle, when acquirers announce a deal, the stock has tended to go up, in fact more than past cycles. Basically ceos are getting more reinforcement. Theyve been up nicely. Theyre kind of the markets telling you that pipelines should be refilling. At this point if we dont get a surge you have to ask yourself why. Is this cycle a little bit different that theyre not going to jump in as much as theyre used to . What would it be if its not risk averse . Obviously this generation has been told that mma doesnt add value and riltser such a winner take all set up where it seems theres a couple of dominant players. Plu plush, prive lt equity is yurnlally sayurn norm and is there an argument that the animal spirits are being unleashed and you should do it yourself . I think theres a case to be made that economic dine mmp has lagged. Again, if you had this industry structure where basically the strong just stay strong and theres Less Movement around the edges, i think theres a possibility. You see these uses of cap capital and twobackets in the same yare yup and youre finally beginning to see a little bit of the animal spirits beginning to come about in oo sector that was dormant for the last four or five years. That would be the kpunt sfrort me. Everywhere else asset managers, exchanges, consolidati consolidations, things of that nature. Coming up, another executive departure at uber, the ride sharing giants president taking off after a six months on the job. More coldplay. Its for you. That story next. And we talk about the fed lettest decision to lost to rauj urfed hfr 3 . What anyhow what he called him . What . An arsenal. Bp uses flir cameras a new thermal imagining technology to inspect difficulttoreach pipelines, so we can detect leaks before humans can see them. Because safety is never being satisfied. And always working to be better. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back everybody. Right now its time for todays executive edge. More tur moil at uber as another Top Executive leaves the company. Hes quit after just six months on the job. He joined uber from target where he was the chief marketing officer. He says his believes and approach to lm are inconsistent to what he saw at uber and they suffered a loss in court on friday when a judge in Washington State upheld an ordinance in seattle allowing drivers to organize and give them the ability to negotiate fairs and benefits. Saks fifth avenue inadvertently released Information Online for thousands of customers. They say saks, guilt, and lorden taylor were storing Customer Data in plaintects. It showed internet addresses and product ids. The brands parent, hudson bay has taken the information down and is quickly moving to resolve the situation. And prosecutors in munich reportedly searched the offices as part of their investigations into diesel emissions tests. German newspaper, build searched the headquarters in the factory as well as the vw. And searched personal calendars, notebooks and smart phones. The ceo was targeted because hes also ceo of the supervisory report. Getting to the next frontier. Mars. What needs to be done to get humans beyond the moon. Famed Science Fiction writer will join us next. Right now were headed to a break as we do. Lets take a quick look at whats been happening that european markets. Red arrow with the dax and the cac down. Stick around squawk box will be right back. Our first name has always been american. At at t, we employ more than 200,000 people with goodpaying jobs. Connecting consumers and budiness through mobile, internet, and entertainment. At t invests more into americas economy than any other public company. Bringing americans more choices, more freedom, and entertainment everywhere. No company is more invested in americas future than at t. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. All while reducing americas emissions. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. After test launches and cargo deliveries in the last few year as new generation of space Rocket Companies are becoming closer to becoming a part of daily life. And humans still havent managed to reach other spots in our solar system. Were join bide a writer who spent a career giving perspective snap shots on where humanity will be in the future. We want to welcome kim stanley robinson. Were going to talk about 2140 but were space freaks. We watch guys like elon musk and bransen all trying to get into space, mars, the moon. What do you think is realistic and what should we expect in the next 10 years . Ive been been to spacex. Their factory in hawthorne, california, is a beautiful thing to see. People making rockets from scratch from flat sheets of aluminum in los angeles near the airport. And the falcon and falcon heavy are tremendous rockets. We need them badly. I love seeing that stuff. You cant make a profit in space except for communications industry. Lower orbit, satellites up there you can make money because people want to pay you for what satellites can do. The rest of the stuff thats in space is just as common as dirt. It mostly is dirt. So if you think about it as a business proposition, you never see a payoff. It needs to be a public project. For these private millionaires and billionaires interested in space, it would be like a legacy project. Going back to the moon strikes me as the one that could happen and should happen. Either the Chinese Government or our private companies combined with nasa, get back to the moon, set up bases, start doing interesting things there. Also start doing manufacturing you drop things into earths orbit rather than rising them from earth. What do you mean when you say getting back to the moon. What would we do . What kind of space plans would we have once were there . I think go to south pole and north pole because theres water there. Theres ice in these craters that never see sunlight. Its enough for human purposes. Without water you cant operate very well. So go to the poles and set up observatories and begin to do maybe some manufacturing that we would drop into earth orbit, maybe solar power. Theres still nothing very economical about going to the moon. Its more scientific. Its more a matter of exploration. Mars, everybody is interested in mars, including elon musk and me. Theres a tricky problem in terms of landing on mars. Weve only had 50 success rate in landing robots on mars. If you have humans on board, a 50 success rate is just a nasty proposition. You would want it to be safer than that. I think mars is a little further out than people want. Is it a gravity problem . Its the problem of an atmosphere that is dense enough to burn you up but not dense enough to slow you down properly. Its a trajectory problem. Coming in too fast and not having an atmosphere you can aero break in like around earth. Was the martian mostly correct . Mostly correct to the nth diagnosis compared to most Science Fiction movies. The whole game of the martian was to try to play it start. Why cant we land on the moon with no atmosphere. Light gravity, put in rockets. Gravity makes a difference because its smaller. Yeah. You come into the moon slower. So mars has the problem of its atmosphere and its distance. You go pretty fast. Youre going too fast. Do you see any way around the vast distances in space for us to really go somewhere outside of our neighborhood . Accelerating getting anywhere near the st. Pete of limit, takes forever to accelerate and you turn into mush and decelerate. Having to decelerate. We cant go anywhere. We cant go anywhere. We cant. No. My latest book before this new york book was aurora, we cant get out of the solar system, a fantasy. Unless these other im sure theres infinite life but how does it travel . Is it possible to go into a worm hole. Can you go faster than the speed of light if you get through it . I dont see how you would survive it or do navigation. Thats why no one has contacted us. They are out there but thats what i think. Life is a planetary expression. Its all over the universe, were looking at each other but we cant cross these distances. They are too vast. Do you think, stan, people say it could be siliconbased, i think dna is so amazing, if matter is constant throughout the universe, i wouldnt be surprised to see a double helix somewhere else. This the great unknown. Im confident we cant get out there. When you ask is there life in the universe, it could be that were the only life in the universe would be very bizarre or could be that its everywhere like your oppoeuropa, mars. We need these chemicals reactions dramatically. I wonder if youre outside this temperature range theres some other way to do it we dont know about. There might be or might not. This temperature range is very kmob. Very common. Every sun will have a goldilocks zone where its not too hot and not too cold. We figure matter is constant throughout the universe, helium, carbon. And distribution of it. We can tell we can look and say thats helium out there, hydrogen out there, even though its 10 million light years away we know what it is. Yeah. Stan, very quickly. Almost out of time. The new book is 2140. It manuaimagines its the new v, under water. Even takes markets into account, people using Financial Markets to make bets on the new market. A novel about finance and how does finance deal with the real world. We are in the beginnings of Climate Change and sea level rise. Weve already baked in a certain amount of Climate Change already. Sea level rise if all the ice on the planet would melt, it would be like 220 feet. A big if. Not very fast because antartica is a giant cake of ice. Were doing an eighth of an inch a year, 3 millimeters a year. Since 1880 weve done a grand total of 18 inches since 1880. At the high level of projection. 8 feet by 2100 if we double projections right now. Youve got 50 feet by 2140, but its Science Fiction so its okay. In scientific terms thats one standard deviation. That kind of thing happens all the time. It only needs a couple of perched ice in antartica. It happened to be one temperature rise that led to 10 meters of sea level rise. Weve done the one temperature rise. It looks like theres ice perched in antartica. Those are based on models and models weve already looked at have far overcalculated the sensitivity of co2 weve seen so far. They are up here. Were barely setting new records. My impression is that every time scientists recalibrate things are going faster and more intense. Well see. Stan, thanks for coming out, we really appreciate it. The new book is called new york 2140. Coming up, the white house about to open bill gates. Washington watch, from Health Care Reform to the trade debate, it will be a busy week on the hill. How it could impact the markets and your money straight ahead. Crude realities. Oil prices slipping. Well tell you why next. Plus get on board, a Record Number of travelers will take to the sky this spring. Well tell you whats behind the surge. Check in qantas ceo as the second hour of squawk box begins now. Announcer live from the beating heart of business, new york city, this is squawk box. Good morning, everybody. Welcome back to squawk box here on cnbc. We are live at the Nasdaq Market site in times square. Im becky quick along with joe kernen. Andrew is off this week. Our guest host this hour is Richard Bernstein, the ceo of Richard Bernstein advisers, also a cnbc contributor and well have more from him in a moment. Thanks for getting up. Good to see you. Good to see you. Thank you. A check on futures, we have seen things agents lower. Dow futures indicated oun by 6 points, s p off close to 2, nasdaq down by 3 1 2. This comes after markets ended slightly higher for the last week. Oil prices, which rebounded a little bit last week after being down 9 the week before are down once again this morning. A drop of another 1. 3 . Wti sitting at 4815. Among todays top stories it will be a busy day on capitol hill. Fbi director james comey will be appearing before house intelligence committee. This is part of a probe into russian interference in 2015 u. S. Election, also about President Trumps accusations that trump tower was wiretapped by president obama. The confirmation process by the Supreme Court nominee begins as well. Neil gorsuch has a date with judiciary committee. Its expected to be another highly partisan battle. Ride share uber lost a Top Executive after seven months. He said approaches are incompatible with what he saw and experienced at uber. Couple of stocks to watch. Sprouts jumping in premarket trading. Organic grocer held talks with albertsons. Helped lift whole foods. Abbott under pressure showing abbott dissolve vascular stint caused more adverse events than in patients treated with an older stint made by abbott. However, researchers did say change in guidelines should produce fwer results. President trump is going to be meeting with Billionaire Technology pioneer today. Y lan joins us with more. Good morning. Reporter hes scheduled to meet at 11 00 a. M. Global health and Public Education as potential areas of bipartisan agreement. But the budget blueprint the white house released last week cuts funding for both of those things. The Gates Foundation called these reductions deeply troubling, warning they would make america and the world less safe and prosperous. Another point of contention could be Climate Change. Epa administer scott pruitt is skeptical of Global Warming but its something bill gates is passionate about. You might remember he was on squawk box a few months ago talking about his billion dollar Fund Breakthrough energy ventures. Back then he was hopeful the two sides could find common ground. He sounded cautiously optimistic in that interview but a lot has happened since then. Theres also the travel ban that Tech Companies including microsoft have ardently opposed so far. There is plenty for these two businessmen to discuss today and well be bringing you more as we have it. Back over to you guys. Thank you, ylan. Fbi director james comey will testify today, p. J. Crowley, former assistant secretary of state and author of red line, American Foreign policy at a time of fractured politics and failing states. So youve been watching everything swirling around these things, p. J. Both sides have something riding. You have one side that wants to prove collusion, the other side wants to prove wiretapping during the campaign. Any indication that either thing happened . I think first of all from beckys summary, its important to understand that inside all of the swill of politics that well see today is a very important question, what did russia do to try to influence 2016 campaign. Youre right. On the democratic side there will be probing, what were the contacts between trump operatives and russian officials and did that rise to the level of collusion. Probably not will be the answer we find out. On the republican side, there will be concerned, and rightfully, so about the leaks of all the information weve seen. For example, transcripts of conversations between the Russian Ambassador and former National Security adviser Michael Flynn. Rising above all of that is the question of was there wiretapping of trump tower. One would hope that fbi director james comey will be able to say definitively in public what he said in private, evidently no, theres no evidence of that. Whether that is good enough for the White House Well have to wait and see. What if there was can you say, no, there was no wiretapping. Yet, if they did get the legal go ahead to monitor Michael Flynn and monitor, lets say, stone. Who was the other operative they said potentially, so that any of those calls were being monitored. Thats not specifically wiretapping the white house but they could have been in on conversations between prump aes trump and those three individuals. Will that come out . I dont know that will come up in public testimony. Of course, thats the byproduct of perhaps the white house attempt to steer the conversation away from russia. The president is concerned all this talk about russian interference undermines the legitimacy of his election. The dilemma is that in trying to change the subject to this question of quote, unquote, wiretapping hes undermined the credibility of his presidency. So have to see how that falls out. Obviously if there is an indication there was an active investigation of some of these people around the trump administration, theres a there there, and that obviously will put the white house in a bit of a box. Im not sure well get to that level, but im sure that there will be questions around wiretapping about surveillance. You know, the surveillance of the Russian Ambassador is something that the National Security agency does as a matter of course. I think thats how the we came to the intercept of a conversation or conversations between kislyak and Michael Flynn. The only data point we have is Jeff Sessions as a senator ran into the Russian Ambassador as did a lot of people. I mean, i dont know. You say maybe it doesnt rise to the level of collusion. Where do we see anything approach that at this point . That will be the subject of the conversations today. Jeff sessions has faulty memory, conversations with ambassadors, thats what ambassador do day in and day out. I dont know there will be a there there. I think coming out of today, one of the major questions will be should director comey or others try to put to rest this question of wiretapping. What will the white house do . For whatever reason, they have tried to keep this alive, even brings last week two allies into the conversation with gchq and that accusation and trump turning to Angela Merkel and saying, well, we have something in common. So i think if i were the National Security adviser h. R. Mcmaster, id be working very, very hard after today to have sean spicer say, look, the president s questions have been answered. Id be working very, very hard to have the president of the United States say nothing further about the subject. So im going to make a statement and you tell me on a scale of one to ten what you think the influence is. There are holdovers in the state department that constitute something called deep state that wants to undermine the new administration. Thats possible or not possible that there are people left from the Obama Administration that its in their interest to undermine the current administration. That is possible . I dont think of this in terms of the deep state. The state department where i worked for two years, its about promoting american interests around the world. On the one hand, sure, there are people in any agency of government that didnt vote for President Trump and dont like what hes doing, absolutely. By the same token based on 30 years in government, other people that are working hard to try to promote the National Interest every single day. So im not an advocate of this concept of the deep state. Thats much too sinister and to conspiratorial for me. Its like a two or three but it exists. Are there agencies of government . Yes. The president of the United States now leads those agencies of government. At some point in time hes got to arrive at a Comfort Level in terms of how to exercise his leadership. He came into office as an outsider. Here in washington hes the leader of the free world. He has to figure out how to lead the government he has. We know in one of the midnight hours before the prior president left, he disseminated he made it much easier for all these different agencies to share information about russia, right . In purely intelligence terms, what was the reason for that other than trying to undermine the next administration . How can you attribute it to anything else . I think what Vladimir Putin was trying to do, he had a preference in the 2016 election. I was in some meetings with Hillary Clinton and russian officials. She didnt like Vladimir Putin, he didnt like her. He chose to try to intercede and, you know, create a dynamic that worked in President Trumps favor. That doesnt in any way change the outcome of the election but it is something that we have to get to the bottom of not only for our future security but also the fact that we have key elections in europe this year. We just had one last week. And ultimately the western world has to have confidence in its democratic processes and thats what Vladimir Putin is trying to undermine. Thats true. I think russia is all over the place. They are doing the same stuff in europe we do. Anyway, p. J. Crowley, i appreciate it. Thanks for your time this morning. A pleasure. When we come back, ceo call is in session. Chief of Airline Qantas airways will join us on set next. Plus impact on big pharma. Sam wak sal will weigh in how President Trumps pick may impact things. Well talk about all of it. The only federal president that voted no to rate hike. Well talk to Neel Kashkari, first cnbc interview. Youre watching squawk box on cnbc. upstate new york is a good place to pursue your dreams. At vicarious visions, i get to be creative, work with awesome people, and we get to make great games. what i like about the area, feels like Everybody Knows each other. And i can go to my local coffee shop and they know who i am. Its really cool. New york state is filled with bright minds like lisas. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. Welcome back to squawk box. Ask for it and you will the nasdaq is very generous. They are in tune with our needs. You ask and they respond. That is really beautiful. Thank you so much. That is beautiful. Last week. Thank you very much. We had the guy in charge of ipos. Yes. He was here as a guest. Were we still on camera . Yes, we were. Joe put him on the spot. A lot of times they have a spread out here, usually for companies that are going public or having meetings. The company if they care enough about the company they have bacon. Sometimes eggs bene, sometimes unbelievable spreads so. Were here, were putting the nasdaq on the map, you know what i mean . Joe has been known to steal away from the set and steal some of the bacon over there. You go public on nasdaq you get bacon. Not necessarily. It depends how much they like you. For opening bell. If they ring the opening bell they get bacon. If you ask. Do you think this is going to be every day now . Were going to move that down here. Becky, you noticed your whole one. Im going to share with you. Thats kind of you. I rang opening bell and i didnt get any bacon. You didnt get any bacon. You know what, were going to take care of that right now. Maybe because im guest hosting. Each piece im going to take some home now that i look at it. Each piece looks cooked to perfection. None have the slimy beautiful. Beautiful backon. Thank you, nasdaq. That is still open, the other one down here . We wont mention. I dont think they have any bacon there when did they even bacon is the future. Qantas airways in the midst of navigating threeyear turnaround plan. Latest update dream liners in the fall making qantas first carrier to connect every continent with australia nonstop. Joining us ceo of qantas airways. Thanks for being with us today. Nice to be here today. Youve made a phenomenal turnaround, getting new jobs, new aircraft, retiring old plants, getting rid of some of the nonprofitable routes that were there before. People are sitting up and paying attention. People trying to copy what youre doing. Weve increased Customer Service, if you products, new seats, no loungers. Weve increased the engagement of our people. We talk about travel of transformation, financial results, Customer Service results and engagement results. How do you do Something Like that. A lot of times for carriers here that try to do that, you run into problems with some of the employees not being thrilled because their pay is being cut or benefits being cut along the way. How do you take care of those issues. You reward employees in good times as well. We made record results last year, made 1. 5 billion. We gave a significant bonus. Last few years, 160 million in bonuses. Also right by communication continuously talking about the issues the company faces, what the future is and talk about Bright Future when the Company Makes money. You can invest in aircraft, invest in their jobs. I think if you get that right, you can get people to come with you. You make it sound fairly easy but im guessing its not that easy. I take every airline and every company goes through different changes that it has to face. It depends. Were very lucky in australia. Qantas is probably an iconic brand. A lot of people want to work for it of its a company that around the globe is recognized. One of the few companies that flies to every continent. When you have that getting people motivated to work for a company like that is easier than creating screws or something. Theres something emotional about the company. Rain man. It was. For the last three years in a row have the Safest Airline in a world. Never had a crash, fatality. We havent. Were the oldest continuing operating in the world. Its not a world. Queensland and Northern Territory aerial services. You dont see a lot of qs without us. I want to buy a vowel for you, get you one in there. On april 1st we got so fed ep people adding into it, we did an april fools joke with the u in it, actually painted an aircraft. Qatar, not many. Qatar i think is not really spelled. Do you know any . Go ahead. No, i wanted to ask a real question. Allen, what happens if the Australian Dollar appreciates 10 or 20 . What ld thwould that do to you . For the moment its a sweetspot where it is. It did appreciate, makes us more expensive as an airline because aussie dollars and attracts more airlines in. Thats not a good thing. The way the trend is going with the u. S. Dollar, Interest Rates here increasing, its more likely to weaken that strengthen, so we think thats a good thing in the longer term. What about competition . Youve kind of changed your views, at least the airlines views on competition and partnered with people like emirates seen as the antithesis of anybody youve cooperated before. Weve decided to team up with the best airlines in the world. For europe the best network we can team up with is emirates in dubai where they serve 40 points in europe. Our biggest partner is american airlines. We have more destinations through the u. S. , l. A. , san francisco, dallas and new york. We think that partnership is a partnership that has the biggest growth going forward. Actually demand from u. S. And australia we take over next few years should see a build and its something were pretty excited about. So the best airlines in the world, i think you have to team up with this day and age. You cant fly to every destination on your own and those partnerships are extremely important. In the United States, u. S. Airlines has seen a resushlgence over the last few years. A lot of it has been because of declining competition. Is eight similar story around the globe . Its not. In australia weve had a huge amount of capacity, particularly chinese carriers. Weve seen chinese build, 100 million tourists last year. Top country to come to in awareness its number one, but in actual visitors its number ten. All of the numbers have in the next decade an average chinese visitors. So we had this growth of 20 capacity coming into australia from china. In the next decade we could see over 4 Million People from china coming in. Theres a big boom happening in the asiapacific region and qantas is lucky to be able to participate in it. Alan, want to thank you for joining us. Thank you very much. I want to get make bacon since i didnt get them last time. We have cream cheese, too, and like bagels. Probably. Have you ever done that . I certainly havent done that. Its for fat people. Ill show you. You have to be. But ive been sitting here thinking about that, which shows you. Coming up, byebye duke, byebye villanova, march madness. The stunner is next. Well be right back. Plus his take on the Global Economy and rolling back dodd frank, an interview you wont want to miss starting at 8 30 a. M. Eastern time. Stay tuned, youre watching squawk box on cnbc. Hi, im frank. I take movantik for oic, opioidinduced constipation. Had a bad back injury, my doctor prescribed opioids which helped with the chronic pain, but backed me up bigtime. Tried prunes, laxatives, still constipated. Had to talk to my doctor. She said, how long you been holding this in . laughs that was my movantik moment. My doctor told me that movantik is specifically designed for oic and can help you go more often. Dont take movantik if you have a bowel blockage or a history of them. Movantik may cause serious side effects, including symptoms of opioid withdrawal, severe stomach pain and or diarrhea, and tears in the stomach or intestine. Tell your doctor about any side effects and about medicines you take. Movantik may interact with them causing side effects. Why hold it in . Have your movantik moment. Talk to your doctor about opioidinduced constipation. If you cant afford your medication, astrazeneca may be able to help. When we come back today, were going to get you set for the week on wall street. We will talk Market Strategy next. You can see, look, the futures basically flat lined at this point. They were down this morning. Right now dow futures down by one point. S p indicated open down by one. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley please repeat the objective. Thrivent mutual funds. Managed by humans, not robots. Before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds. Com. Good morning, everybody. Welcome back to squawk box on cnbc. We are live from Nasdaq Market site in times square with bacon. Among stories front and center disneys beauty and the beast Smashing Box Office records. The movie debuted with 170 million in north american ticket sales. That is the biggest ever opening for the month of march. Retailer target opening up 43,000 foot small format store in new yorks harold square. It does have stores in harlem and tribeca. The new store is scheduled to open in october. The Worlds Largest coal company set to emernge after various claims gold mining subsidiary. Joining us to talk about the market, Portfolio Manager forral pine finds, david blitzer, dow jones, and our guest host is rich bernstein, ceo of Richard Bernstein advisers, also cnbc contributor. Welcome, folks. Lets talk about what weve seen in the markets. Probably more uncertainty in the last several weeks about whats happening with aggressive plans, policy plans put forth. Sarah, how does that impact the market or does it from your perspective . I think it definitely does. I think a lot of the positive action youve seen is anticipating on tax side, regulatory side and various possibly stem lew as well. Right now looking at details. Very easy to skip over details in the beginning and prior to the administration starting. Now i think there is a desire for longer term plans so we can see what those details are because people started building in some of that. I think youve gotten a lot of optimism out of the new administration so that hasn and of itself been positive for markets. Where the market stands right now, is it fairly valued based on what you see or undervalued or overvalued based on if these things get through. If some of the changes on the corporate side come tulua boost to earnings. I think some of that is reflected. I also think we dont know what the details are yet. Youve seen some of the stocks and multiples expand on the basis you could have Earnings Growth because of that as well as a little better economy. Its hard to say exactly how much of that is priced in right now. I think you have a fairly well priced market so i think you need to see positive data continued. I think if things slowed down its going to start to look expensive. Rich, where are you on this . I agree. I think one thing people are missing is the underlying earnings trend is still very people think its about about the election. Rotation of cyclic always began well before the election. Upd lying earnings trend is good. One thing id point out, because the economy is healthy, were not in a recession, the program you get from washington doesnt have to be big, but incremental. If they can manage to get something together thats a net positive for the economy, and i think that may not actually happen, but if its a net positive, i think the risk to the economy is overheating because were not in a recession. So i think people rather than worrying about slowdown and deflation should be worried about deflation and overheating. Youre chuckling . I think the market overall quickly has periods, its running on hope right now. The economy is good. Thats definitely a plus. It was set up to take off in november when the election came. The economy better then than anybody knew. Probably better now than most people realize. I would agree the risk in the next few years is not deflation in any way, probably inflation. I think for sure its going up over 2 by the end of this year. By the end of this year you think it will be over 2 . I think inflation is right now close to 2 if not at, and its going to go higher over the next year and so on. But i think for the market, we got all pumped up on hope, euphor euphoria, excitement about the election, excitement about the idea that were going to have big tax cuts and so on. At some point weve got to deliver. I dont think anybody can tell you the date by which weve got to deliver. But if were sitting here next year and it hasnt been delivered at this time, believe me, its going to look a whole lot different and were not going to see very many smiles in that kind of thing. You cant go for hope forever. Have you to have real hope at some point. Theres a story talking about bond, tenyear note is now yielding 2. 5 , that compares with dividend yield of 1. 9 for stocks. The journal suggests that will make people reassess how they look at stocks versus bonds and their investments there. Do you agree with that . I think theres a lot of concern about Interest Rates going higher. So that might scare people away from the bond market. The trend is now since the fed is raising rate. The idea is the trend should be higher. They raised rates and the long bond came down to tenyear. Whether or not historical relationships in the shortterm, thats going to be a question. I think the equity markets have done well and people are worried that the bond markets might not do so well. If you tradeoff on the Interest Rate alone, i think youre not going to see as much of a push into bonds. I think if you look at certain parts of the dividend yielding spectrum you can be higher than the average. But i do think theres a question as rates go higher as to where you want to put your money because youve had so many years of no bond interest at all and people being afraid to be in the bond market as rates start to go up. At some point theres a Tipping Point. Im not sure exactly where the Tipping Point is. The funny thing about the article, underlying assumption is theres some euphoria building here and maybe you should be more cautious on the margin and nothing could be further from the troop. Asset allocations, individual, institutional, makes no difference, people are very income oriented. They are not cyclically positioned. That would argue theres euphoria building, people think were in a new world and this going on forever. Asset allocations are the opposite. People are still worried about downside protection. The 1. 9 the way its going to play out is not that the market is overvalued, its, geez, im only getting 1. 9 yield. I want more. You know, if we look at where people are moving their money, its strictly income the indexes they want are indexes. Thank you. Deregulation, nationwide overhaul, fda might mean big boost for pharma sector. Well talk to dr. Sam waksal after the break. Welcome back to squawk box, everyone. We have breaking news just from across the atlantic. The uk has informed European Council it does intend to invoke article 50 on march 29th. That would be the first formal step in the uks exit from european union. Previously Prime Minister theresa may said this would happen before the end of the month. Now wed know the day march 29th. Joe. President trumps regulation rollback will have a big impact on the pharma industry. Joining us now dr. Sam waksal, founder of gene therapy company, myra gpx. Did you found some other company . Thats right. In clone as well. Good to see you. Good to see you. Youre not herba tucks, what are they doing. Millions. Okay, great. So weve got trump. Hes doing certain things in terms of regulation. You like scott gotly . I think Scott Gottlieb is an enormous plus for america. Youve also got at least some talk about drug pricing that could bring pressure on in accelerators and possibly hurt innovation. Youve got that. Youre hot to talk about nih. Any budget cuts for nih. Youve got big problems with that . I do. Net net is it positive or negative this presidency . We dont know whats going to happen. People look at regulation and health care differently than they look at regulation for everything else. You had Richard Lefrak on talking about rebuilding americas infrastructure regulation. I love richard. There people dont feel infrastructure is a right. Everyone feels health care is a right. It gives you a different mindset. Weve got to be very circumspect about what we do. Nuance isnt a part of politics any longer. When you call it a right. If everybody has the ability to get health care if they do what they need to do in terms of personal responsibility, if the right is out there to get, is taking away the mandate, can you do that and be right do you need to force it . Do you need to make them get it . No, i dont want to do that. Im not going to get into that debate right now. How are you going to do it . First of all what you do do, if youve got a society right now that is aging. Speak for your self. Im not and youre not and becky is not. I dont know ore. Im aging. You look like youre aging. But one of the things thats really critical is if we dont come up with real cures for diseases that are affecting this population, alzheimers, parkinsons, als, neurodegenerative diseases. Chronic. We will bankrupt america. So the nuance of how to deal with pricing is very important. You cant have crappy 50yearold drugs being priced at thousands of dollars. So that we need to effect. You cant have commodities priced highly. So if youve got 10 of something, you compete. Thats what we do in america. So priced at 85,000 a year. Things that change outcome. If someone comes up and nih budget doesnt get hurt badly, hurt at all, we should be increasing funding at the nih so we have more young scientists, more brilliant people that are changing outcome for patients, discover new things, we wont bankrupt society and well have new companies that come out of that research, hire more people and actually it will be a net plus for the economy. All right. I offered you all the Climate Change money for the nih. I want it. Youll do it, cut it to zero. Thats what im going to work on. I think i can get that done. That would be great. You have no problem with that. I have no problem with that. Youre a scientist actually. Go ahead. In terms of the budget, money for science, money for spending on these things, how much more do we need . A lot more. A lot more. Interestingly right now you have young people that are brilliant young scientists, whether they come from university of kentucky or university of michigan or any of the march madness schools or they come from Harvard University in chicago or rockefeller, they need to start working and they need grants. If you dont give them those grants, they cant do science. There was a reason jonas salk and sabin never won a prize for polio vaccine because they didnt do anything. The guy that did it was a guy named john enders at harvard who learned to grow a virus in tissue culture. That was the breakthrough with nih funding, just doing great science. Once that great science was done, the other stuff was easy. Thats what happens in society right now when we do research. We do it on nerve net and hydrajellyfish. We come up with ideas that change neurobiology. They become the building blocks. Thats what we need to tib doing. Just fund great science, the pharma companies, bioTech Companies. This needs to be heard this message. You dont care about big bird, pbs, npr. I do. I care about the National Endowment of humanities and the arts much more than i care about worrying about some other things. All right. So you do want to fund the arts, even though the arts they make us human. I know. I understand that. They make you human. They make your wife human when she sells a piece of art. Thats right. Sam waksal, thank you. This needs to get out on nih, National Science foundation. We need to deal with pricing in a nuanced way so we pay for things that change outcome. We do it properly so we save innovation in america. We do see that the president we hear does watch and he heard about the nih. I hope. Thank you, sam. When we come back we have more of this mornings biggest movers ahead of the opening bell, plus a final market call from our guest host Richard Bernstein. Stay tuned youre watching squawk box on cnbc. 00 years aa benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. Big bird was sold to hbo . Shake shack neutral to underperform. Net boong based on evaluation. Tiffany William Blair firm says luxury goods Retail Business has become more stable and stock is likely to benefit from either comps, same store comps. Big bird is still on pbs but on hbo first. They pay for it. I know what i pay hbo for my cable bill and they are okay. Youre subsidizing big bird. In other news prosecutors in munich searched offices of volkswagen ceo into part of diesel emission test. Audi headquarters searched as part of the base of v wchl. Say prosecutors searched personal calendars, notebooks memory cards and smart phones. Ceo targeted because chairman of audis supervisory board. In case you missed it big upset in ncaa tournament. Second seed duke knocked out late last night by South Carolina. The seventh seed in the region South Carolina trailed by 12 points in second half before taking over. The stunner ended up with a score of 8881. South carolina earns a trip to Madison Square garden in new york to play baylor on friday. Thats the first time the school has reached the sweet 16 since 1973. Probably at this point a little bit of a conflict if you are South Carolina given what happens in North Carolina. North carolina constantly. Between duke and the tar heels. Youd be like, okay, im coming to South Carolina to play. Good for them. You know, my mind i watch all these games. South carolina i had the other team to beat South Carolina and i was sure they were going to i cant remember who it was but i need a lot of its so stupid to try and pick upsets. Because were losing. Youre done. Im done. Im okay. I got 10 out of 16. I got kansas still and i have North Carolina still. I have North Carolina. Im a big rick pitino. I had louisville in the final four. I was surprised. They had it won, i thought. There was so much at stake. Obviously they didnt have it won. Those guys are good. I had michigan in the previous game. It was michigan, wasnt it . Who was louisville playing when they lost . I loved what they did. I was sick watching. Bizarre, stupid little bracket. I watch these things, i had to turn off excitement every year until you start getting beaten down in the bracket wars. Last night it turned off. They were losing by five with 2 00 to go and i had to turn it off. Then i was watching on my phone. Started coming back. Our guest host today is rich be bernstein. Rich, aside from the brackets, what else should we be watching today . I think number one, the more washington can focus on important things for stock market, tax reform, Corporate Tax reform, these type of things, fiscal stimulus, i think the market is going to do fine. The more we get sidetracked into all these other issues, i think the market is going to wobble. You know, earnings are okay, as you pointed out. Not exactly cheap. Whats the next story, doesnt have to be a big story, just incremental. If they can keep their eye on the ball, the market will do well. Infrastructure. Exactly, whether infrastructure, tax reform, deregulation, any of the big three people like to talk about can be fine. It can be a cocktail of those three. It doesnt have to be big just incremental. Were not in the depths of recession. Thats the big thing people are forgetting. We dont need a big package here. Is the fed not as important as it had been before . If they start raising rates a little more quickly than the three wed expected this year does that matter . I think the headline inflation rate is up to 2. 8 now. Two years ago had a negative sign in front of it, so the inflation story is changing. Inflation expectations trofd more than a year ago. Something is changing in that backdrop right there. I think in most cycles the fed gets caught and inflation starts picking up and they rush to catch up. I think thats going to happen in this cycle, too. I think the fed is playing by the normal playbook where you wait, you wait, you wait and its too late and they have to play catch up. I think we should expect that in this cycle, too. Happen and it will be 20 years from now. Twenty years, maybe a longer cycle. The first or second derivative. Like bonds. They go to 2 1 2. The percentage is big but still seems low. I think inflation, so much supply, so much oversupply in the world, seems like were okay, not going into that deflationary spiral or inflationary spiral. Inflationary spiral a la 1970s is very far. Thats what i mean. Even within the last cycle, i think 2008 headline inflation got 5 . We were so consumed about financial debacle we forgot about inflation. Thats one of the reasons the fed was tight think. Nothing bad happens unless the fed tightens too much. Thanks for being here, and you say thank you for having me. Thank you for having me and thank you so much for the bacon. You get to come on for an hour and speak on high and his clients go, hes so good, hes on squawk box. Really, where we thank you or you thank us. It was a real pressure. Thank you. Thank you. Youre welcome. Well see you again. You can on for again for an hour, your clients go, look at my money man. Squawk box up next former senator kerry, the good senator kerry. Well talk taxes, Health Care Reform and deregulation. A little bit later on cnbc an interview with minneapolis fed president Neel Kashkari. Thats 8 30 eastern time. Stay tuned, youre watching a bacon monday on squawk box. Bp developed new, industryleading software to monitor Drilling Operations in realtime, so our engineers can solve problems with the most precise data at their fingertips. Because safety is never being satisfied. And always working to be better. Squawk box newsmaker minneapolis Neel Kashkari joins us live. The loan at center of fhoc makes his case coming up. Tough talk. White house says tax reform may begin in late spring, so what should companies and individuals expect in well ask chairman and ceo Mark Weinberger and former senator as the final hour of squawk box starts now. Announcer live from the most powerful city in the world, this is squawk box. Good morning, welcome back to cnbc. Im joe kernen, this is becky quick. Right now the futures have been now they are up. They are down now up 1. 38 on the dow jones for your radio people. Down 1. 4 on the s p down just under 2. On the nasdaq treasury yields have now moved back below 2. 5. Now just above, between 2. 5, 2. 49, 2. 51. Then oil prices, we see mark grant will tell us its fudderwacken. That was from alice and wonderland. Some weird dance. Johnny depp goes into. Uses it when a market starts selling off. Is that what chuck berry did . I dont know. What if there was no chuck berry, what would we listen to . What do we listen to now. Article 50 march 29th, this will begin formal Brexit Process open twoyear window for negotiations. In Corporate News uber president jeff jones quit after six months on the job. In a statement he says his beliefs and leadership are inconsistent with what he saw at uber. Earnings central will focus on consumer. Among names to watch, general mills, lennar, fedex, nike, winnebago. Joe. Stock to watch. Barrons thinks apple stock could jump another 10 . Barron cites growth in service and new iphone model. Unilever preparing for sale, flora margarine and stork butter brand. Private equity working on offers. Deutsche bank kicking off Capital Raising to shore up books. The firm hopes to raise over 8 billion euros by selling shares at a 35 discount. President trump will head to louisville, kentucky. Thats where hes expected to pitch gop plan to repeal and replace obamacare. The house is expected to vote on the republican bill on thursday. Our guest host this morning former u. S. Senator former governor of nebraska. Senator, glad to have you with us today. Nice to be with you. Nice to be with both of you. Ive given you high praise already, in the makeup room. I dont know why they bother with you, perfect before hand. Guilding the lilly. Say go easy on it. No. Full on. In washington, it is seeming like it is going to be difficult to get some of this legislation passed. It seems like the sides have kind of set in and even among the Republican Party they cant seem to grow on what they want when it comes to obamacare. How do you read the tea leaves on how things are shaping up. Well, the country is pretty badly divided, has been for sometime now. This is going on away from washington. Youve got significant opposition to the president. I think his inaugural address was very divisive and whacked all living presence behind you. Obama did the same thing with his inaugural address. If youre trying to unify the country you have to reach out to people who might be independents and have a liberal view and weaver seen very little of that. On the street people organizing against him and democrats saying you have to vote no on everything. It creates a difficult environment especially for things Like Health Care and tax reform where if you dont do it in a bipartisan way. Its easy with health care to demagogue from the left and right. Its very difficult to tell people the truth in what kind of environment. Tell people what . Making ourselves sick for openers. People want highquality Affordable Health care, what they really meant is they want the best and dont want to pay anything for it. No question its more expensive, high deductible plans increased. At one level what we all want is for somebody else to pay the bill. Thats difficult. Right now rising obesity and type 2 diabetes and diseases associated with us behaving badly. Youre talking about the bacon. Not a great day when we have vats of you can see its not disappearing quickly. We ate one barrel. Always one behind the screen. Can we eat that . Yes. Ill be eating it when the camera goes off. Want me to get you cream cheese and bagel. Cream cheese im not for but the bacon. Whats wrong with cream cheese. What im paying attention to these days are carbohydrates. It works. It does, but its hard to satisfy what your body wants without carbohydrates. I know. Bacon youre fine with, its the sugar that gets you in trouble. Chips. If you stand before an audience and say 40 health care isafter attributable to diabetes, hyper tinge, associated with obesity, that doesnt get you a standing ovation. But its the truth. The other is youll get a little more of it later, but my biggest problem with the president s budget right now, not telling the truth, weve got to have an 80 billion increase on Social Security and medicare. Were robbing from the future to pay for the past. Why . Because we geezers vote in very large fractions. A lot easier to screw young people than older people because they dont vote and we do. Someday it has to be means of the we have to tell health care beneficiary where is the money coming electric, a tax transferred to pay for your Social Security and medicare. Thats where its coming. And the tax is going very obvious on working people, working people who have no capacity to buy their own stuff. The response any tomb you try to cut back from Social Security or medicaid or say youre going to do it years now is its my money and i want it back. It isnt their money. Thats a great example of where we have been unwilling to be honest with the audience because the audience doesnt give you a round of applause if you say it isnt your money. Youre taxes one group of people to pay for your benefits. Yes, you were taxed in the workforce to pay for people who were beneficiaries at the time. But right now more and more of our National Income is going for those retirement programs and it is genuinely robbing from the future to pay for the past. Is it fair to say people take out more than they put into the system . Of course they take out more than they put into the system. Theres some people that dont. For the most part the answer is yes. Its a very progressive system meaning youll get more back out than you put in. Senator kerrey, theres so many people in washington. Ette felt five years ago there was a growing number of people, there was the whole rise above campaign we did here. There were a number of people on both sides of the aisle that were willing to come forward and say these things. Its harder now. It produced legislation but there was a pitiful number of people. What happens if you introduce a bill. You see with ryan, i have fault with the ryan bill but at least its a bill. What happens is once you get specific everybody will attack you. What i think has to occur is those who are supporting the do nothing plan, the president right now and almost every Single Member of congress, the do nothing plan has tax increases, spending cuts for anybody under the age of 50. Thats the reality. The do nothing plan has real quo consequences. Unfortunately not much in the way of political consequences. How do we change that . If you get people on this show who supporting the do nothing plan, you have to hold them accountable. Have you to say, senator wind bag, your original cosponsor of the do nothing plan. Did you know, senator wind bag, as a consequence of that theres going to be a big tax increase for people under the age of 45. Theres going to be a big cut in their benefits. Thats current law. Your proposal cuts benefits and increases taxes senator wind bag, why do you defend it . The defense is, i wont be around. Im only going to run for three more terms. Thats 18 years. As a consequence, i wont be here to face the music. Thats what weve done with pensions across the board. Weve had people like ken langon say tax reform. Have people worry about that. Human nature is if theres 1,000 people out here in a room and you gave me two scripts, one that gives me a standing ovation and one that gets me booed, ill do the standing ovation. Thats the problem. What we have to do as nonpracticing citizens, that is to say were not elected office, weve got to say to individuals on this issue, senator, you are supporting the do nothing plan. Youre the original cosponsor of that bill. The do nothing plan will produce the following consequences. Youre supporting a big tax increase and big spending cut for beneficiaries that are under the age of 45. You have to hold the incumbent accountable, otherwise they will continue to do what they are doing. Its easy to be cynical. Youve got guys in the house. As soon as they are elected, less that two users before they are going to have to do it again so they are immediately worried. Then youve got the senators. I think you need like senator wind bag one, two, three, four, five. You need all senator wind bags really. You give them six years and then they are in for three or four terms. Mccain some of these guys are just institutions and they are not going to get voted out but they havent done anything for so long but bloviate their own selfinterest and pr machine, sometimes i wonder about term limits. Last week andrew and i actually agreed, im not sure its the right thing. Yeah. I dont think its actually easy to be cynical. Its easy to be skeptical. You choose to be a cynic. Even you havent made that choice. So i understand the motivation, lets put term limits in place. How many house guys willing to vote on something they know they wont win in two years. The problem is they are going to want to you say its a 12year term limit. Ill stick with my original proposition. Original proposition if you have a choice between standing ovation and round of boos, you go with standing ovation. Theres much in the Ryan Health Care bill i dont support, that i dont like, but its a bill. I can look at it. I can analyze it. At least its an answer to the question, what do you want to dd do. Its like so many things, i look at theres pros and cons. Do the ben franklin close, theres one more reason to do it, ten on each side. Term limits seems like it makes sense, then the answer was experience friends running. Youve got to learn. You should get better at what do you if youre there for a while but theres no evidence of that. I think there is. Something might get done. Terms effective. There are rules, you learn how the place works. I think you should get better the longer youre there. Senator kerrey our guest host, much more to talk about with him. Tax reform can it be done before summer recess. Neel kashkari will join us live. At f mulch oc meeting. Philadelphia fed Patrick Harper will join Steve Liesman squawk on the street at 9 40 eastern. Youre watching squawk box on cnbc. What if technology gave us the power to turn this enemy into an ally . 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Chief operating officer dave watson has been named president and ceo of comcast cable. He replaces comcast vicechairman kneel smit. Nabisco and navy s. E. A. L. He was a supporter of squawk box, good guy. Sounds like hes going to be find, neil smit. Ceo, a lot of bench strength at comcast. Thats great. Vicechairman. White house meanwhile says tax reform might again in late spring among things expected in the president s plan, lowering corporate rate and reducing the number of brackets on individual taxes. Joining us now Mark Weinberger, chairman and ceo of eny. You guys pitched the academy on doing the envelopes. But for the grace of god i feel for my colleagues over there. It could happen to anyone. You didnt swoop in there immediately and say this would have never, ever, ever happened. That was it doesnt seem like its that hard to get the right best picture out there. Human error. Human error. It happens. Would you have been taking selfies of scar jo. Joe, im not going there. Tax reform, obamacare has to be done first of is that the right way to go or can it all get bogged down in that . A lot riding on it. The budge, senator kerrey knows better, budget intricacy. Has to get done first. 2017 reconciliation bill. Have to get that done. 2018. Doesnt look like democrats are going to sign up for tax reform. Got to get through 51 votes, turn it after they do health care. Thursday, i bet you it passes on thursday in the house. I think the house is going to get it done. Then it goes to senate. They get to do what they want over there, right . They can rewrite a couple things. They will make it more obamacare like, then they have to send it back to the house. Then conference. Tax reform is going to be the same thing. The house is going to do what they are going to do, senate do what they are going to do, the key is to get it to conference. Then everything is on the table. They can rewrite the whole bill. The house has to make things more conservative to get their membership to sign off on it, then water it down. Sign off on it. So you think it gets done. I agree. This year . Yes. From tax reform or health care. Health care. I think it gets done. I think the president is going to have to really instead of rallying the right to support this thing, hes going to have to appeal to the people in the middle. I havent seen that yet. Whats happened, best seen, mark, in the good old days when we were there, you almost always had republican, democrats forming in a Bipartisan Group looking for an alternative. There is no such thing. When you have Elizabeth Warren and bernie sanders, where does that put the middle . The middle is out here. You would be a right winger. You would be a right wing conservative in the senate right now if you were there. You would. I dont know if id go that far. You wouldnt even recognize poem. The hardst thing in politics is make your friends angry. Its easy to make your enemies angry. Thats whats going on right now. Democrats are afraid to make their friends angry. Republicans are afraid to make their friends angry. As a consequence bipartisan thing going on, nothing. Whats going on, everybody smiling when youre at the white house . No, no. Theres a lot of hard work going on, i will say. All the ceos, ones not supporters, obviously, they are trying now to cooperate and get things done. They are, joe. As the senator knows i worked directly for senators clayton and bush, an obama task force. Trump is the most hands on in terms of get things done, gives ceo things to do between meetings and we have tasks to work on and come back with proposals. Were not going to do them all but we really feel like were being heard. You know if you do not do the homework whats going to happen. Youre fired. Respondent hands on, thats not your mark said it, i believe it. See, thats why youre not a democrat anymore. You cant even say that. Thats why he and i are friends. Whatever he says i believe. We went through a lot. Senator kerrey will hold us to not what he says but what gets done. He will measure it on what gets done, always did, thats why i admire him so much. I do think well have tax reform this year. Whats it going to look like. Lower rates. Not 15 . Above 20. Could be in the low 20s. Depends how much pain were willing to take. Has to be fiscally responsible. Doesnt mean revenue neutral every year. Is 22 something that will make us more competitive. If you can get down to the low 20s and have an International System thats competitive to let Companies Bring home their cash without consequence that would be competitive internationally and drive capital to the United States. What youre describing sounds like something that leaves out the border adjustment tax. The border adjustment tax is a powerful mechanism to get investment here in the United States. The problem is the for governments arent going to like it because its not like a value added tax exactly and so they dont have this anywhere else. Two, right now we have about two paragraphs explaining it and we need a lot more detail. The Business Roundtable had a meeting. All the ceos there, had people coin and talk about it. A couple are opposed, a couple in favor. Vast majority waiting to see what it really is and how its drafted. Barrons this week had a cover story really taking it down saying this is not a good thing, too much uncertainty and even opponents cant agree. Its going to be hard enough to get the corporate rate down to 21, let alone replace it with a system, saying basically to walmart, target, do not worry, dollar will revalue and take care of itself. Thats going forward. You think a bridge too far. Its difficult to make a case cut medicaid 300 billion in order to get room for tax reduction. Thats a tough proposition for republicans or democrats, by the way. Thats the general proposition. When you get into Corporate Tax reform, youve got to have off sets of exemptions that were currently in place. Youve got to take things away. Taking things away is hard. There is no easy way to do it to your point if you want to be fiscally responsible. It has to be fiscally responsible because after 10 years it has to be budget neutral unless it goes away under budget reconciliation rules. Whether its this adjustment, reductions, credits, exemptions, other things, there is off sets that are difficult but i think they are going to get it done. All right. Give me some bacon . We have plenty to share. Theres perks when you come on squawk box. I cant wait. Thank you. Ill have some bacon, why not. Mark, thank you for joining us today. Its great to see you. You too, becky. Are you leaving . My time is up. Youre here all morning. There is a new kid on sesame street for the first time in ten years. We have the details next. Efore. 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But i found so much more. its really a melting pot of activities and people. applause, cheering new york state is filled with bright minds like victorias. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. Rafe coming up, minneapolis fed president Neel Kashkari will join us live, lone descenter. First as we head to break take a look at u. S. Equity futures. Youre watching squawk box. Squawk box . Right, on cnbc. Is that you can create wealth through capital appreciation, and this has been denied to many South Africans for generations. This is an opportunity to right that wrong. The idea was to bring capital into the Affordable Housing space in south africa, with a fund that offers families of modest income safe and good accommodation. Citi® got involved very early on, and showed an enormous commitment. And that gave other investors confidence. Citis really unique, because they bring deep understanding of whats happening in africa. I really believe we only live once, and so you need to take an idea that you have and go for it. You have the opportunity to say, ive been part of the creation of over 27,000 units of housing, and to replicate this across the entire african continent. Good morning, everybody. Welcome back to squawk box here on cnbc. We are live from Nasdaq Market site in times square. Among the stories that are front and center this morning, beauty and the beast had a record setting debut this past weekend. The disney movie took in 170 million in north american ticket sales. That is the most ever from march opening. They steered clear of beauty and the beast because they knew fans would be out. Fans of nectar therapeutics, opioid painkiller. Treatment is just as good as standard opioids but comes without the feeling of euphoria that can lead to abuse and addiction. Cnbc said the issue limited to saks and none of the other hudson bay claims. No credit card, payments or password information was disclosed. The issue affect add small percentage of customers. Hudson bay says it takes matters like this very seriously. Check this out. Sesame street adding a new character to its main cast. The new muppet named julia is autistic. Elmo introduced julia to the world on 60 minutes saying we really like julia, she is really special to us. They have two things they are trying to do. First of all make kids with autism feel more included and then make kids who dont have someone they know who has autism maybe have a little insight into the world as well. Its Getting Better i think in terms of other kids understanding. Thank god for the awareness of everyone and legislation that puts teeth into something parents didnt really have anything to do. New jersey harassment, there was teeth thane thing. You dont want that on the record. Thats what you need. These kids need to be protected and the teacher cant always be around. Fmoc voting almost unanimously to hike benchmark Interest Rate by a quarter point. There was a lone descenter, Neel Kashkari, president of Federal Reserve bank of minneapolis and he joins us this morning. Neel, its great to see you. Thanks for being here. Good to see you, becky. Thanks for having me. The other nine members voted to raise rates. You did not. Why was that . Well, nothing has really changed for the last five or six years the Federal Reserve keeps predicting inflation is around the corner and those predictions end up being wrong. If you look at dat oorks sips last fmoc in january, core inflation that we focus on basically hasnt changed, moved sideways 1. 74 , short of our 2 target. At the same time the job market continues to perform very strongly creating a lot of jobs and the Unemployment Rate has been stuck around 4. 7 . Thats because Labor Force Participation keeps climbing. Thats a really good things. Americans are reentering labor force or staying in. So if were coming short on inflation and the job market shows more signs of slack, my question is why do anything . Why not allow this to continue until we see reaching maximum employment. Your argument is wait until you see the whites of their eyes when it comes to inflation . I want to see inflation, core inflation move up towards our 2 target. Its supposed to be a symmetric target. I think were behaving as though its a ceiling. Were 1. 7 core inflation. That means 2. 3 if we were above it shouldnt be any more concerning. So we have a lot of room here to let inflation back to target, allow the job market to continue healing, allow wages to start creeping up. Were just a long way away from having anything to be concerned about. My reaction is, my concern is why are we raising rates until the data tells us its time. Because monetary policies is supposed to be forwardlooking. Here is something that obviously argued this for a while. This guy has more money than god, and he made it by looking at the markets. He goes, why do we need negative real rates of 120 basis points with unemployment at 4. 7, core cpa at 2. 3 and even core pce within statistically significant range of the target. Youre there. Youre already there and youre supposed to be forwardlooking. So thats his point. Why do you need these emergency measures when youre basically right there . Well, here is the thing. We all i think we would all agree, good to see you, too economy growing more slowly than we like, growing more slowly for the past several years, yet had low Interest Rates. If we were providing monetary accommodation, i would have thought the job market would be rocketing, the Unemployment Rate would be dropping much more quickly, inflation would be taking off. None of those things are happening. Neel, what do you mean, rocking 2 unemployment . When has that ever happened . Youre almost already at i know you said Participation Rate is one thing. How do you know that by not allowing savers to make anything and by forcing corporations not forcing but allowing them to do all this Financial Engineering with these low rates, how do you know youre not the reason the economy is growing slowly . Its not that its not enough, its that its too much already that youre doing. Well, you put a lot in there. Let me respond here. Look at Labor Force Participation. You look at the charts, im not talking about the aging of society. If we look at working age americans, a lot fewer working age americans are working today than were working before the financial crisis. So theres still room to go getting working age americans back into the labor force. That shows us that the labor market is not fully recovered, number one. Youre right. Headline Unemployment Rate does suggest it. If you look at other measures like u6, which includes parttime workers and people who end up looking and Labor Force Participation, there are still many more americans who want fulltime jobs that have them. Second of all, push back on your guests who are arguing for higher rates. Somebody needs to explain to me how higher rates leads to more investment, faster Economic Growth. At the core of this, people saying the fed needs to get going, they need to sit there and explain to you and your viewers and me how higher rates leads to more and faster Economic Growth. I dont see it. They would say corporations obviously have not been investing longterm, have not been investing in capital and things like that, they have been buying back stock. They have been so money is so cheap they are able to buy growth through mergers and acquisitions. They have been doing Financial Engineering instead of what they should have been doing for growth in the future. Thats what they should say. Lets test that. What do Insurance Companies do that invest for pensions. They are lucky to get 2 or 3 . I understand. Joe, lets take this for a second because its a really important point. Somebody needs to explain how we raise Interest Rates, so its higher cost to borrowing for businesses. They are going to say im not going to buy back my stock, im going to build a factory because Interest Rates are higher. That makes no sense. You would have thought you keep rates at 0 all this growth would come. The converse of that if rates go up a little, it doesnt necessarily mean they are not going to do these things. Its not going to hamper growth because keeping them at 0 didnt spur growth. What stimulates an economy. We grew like crazy at 5 , 20, 30 years ago. I understand. We go back to the last five or six years. I agree growth has been slower than any of us would like, but i still argue how can one rationally say if we just had higher Interest Rates that would have led to faster Economic Growth. I think if we had higher Interest Rates, slower Economic Growth and tougher job market. Neel, part of the thing youve said youre concerned about, though, is trying to figure out what to do with 4. 5 trillion dollar Balance Sheet. Weve had other people, Richard Fisher talk about that, how do you feel about that and running off some of the issues and let them rundown. I agree with you, becky. The piece i published friday, that was one of the points i made. When the data do call for removing some monetary accommodation, my preference would be we first articulate a plan of exactly when and how were going to roll off the Balance Sheet and then we allow the markets to react to that plan, absorb that information. Then as we move forward, we allow the Balance Sheets to start running off and then we can return to fed Fund Rate Hikes when the data call for it. Im in agreement. My preference is we get going on the Balance Sheet next. Let me ask, why arent we in a position to start letting the Balance Sheet rundown now. Just because 4. 5 trillion dollars, i get it when were in an emergency. Seems like a long way from an emergency, though. I agree. I think thats why all of us are looking at is very seriously now. This is a point of active discussion. I think were going to do it at the right time. Im pushing us to try to go sooner rather than later. You think about it, the reason the fed expanded Balance Sheet back several years ago, once we hit zero, the question was, is the fed out of ammunition, longer bonds to push down the long end of the yield curve to encourage that investment joe and i were talking about. That all made sense. Now as the economy heals and calls for removal of accommodation, i do think the Balance Sheet should be the next move. The Participation Rate is all things to all people, too. Like your argument, liesman has been telling me for like years its got nothing to do with people wanting to work. All baby boomers retired. Demographics, no, no, no. Four seven is really, blah, blah. You use the opposite. You use it as evidence theres plenty of slack left and not really 4. . I dont know what to believe anymore. Youre smart, liesman is charge, who is right . Well, im right. Hes wrong. Im just teasing. Were both right. Here is the thing. If you look at the overall Participation Rate, liesmans demographic factors absolutely show up and the trend is gradually down because were getting older as a society. Thats one way of looking at it. What i prefer to look at is work age duties. A level deeper. Working age adults. Theres no good reason why that should be dropping yet it has dropped because of the financial crisis. People under 50. 30 to 50 show up and not participating in the workforce. See, im with you on that. Thats exactly right. Doesnt feel plik four serve thats for sure. Youd have more wage growth. Correct. So even now wages have started to creep up. Started. But they are not creeping up to a level that is concerning in terms of inflation. They are not back up to the levels they were at in growth in 05 and 06. So core inflation on Inflation Expectations on wages, none of these are showing alarm signs right now. That tells me weve got room to wait to allow the labor market to continue to improve. Once the data shows its really time to remove accommodation, im going to be all for it. For a guy that was there trying to deal with the housing bubble, that would be the other thing that people would bring up to you, you dont know what low rates are really doing. You dont know where the next dislocation is going to be based on youre not seeing a lot of benefit from zero. Who knows you might be inflating something that comes home to roost in the future. Thats probably what you would say. You must know theres nothing on the horizon. No. Its a very fair question. People point to the stock market booming. My response to those folks is we care about asset price movements if we think a correction could lead to financial instability or financial crisis. Think about the tech bubble. The tech bubble burst. It was not good for the economy. Obviously it hurt. There was no risk of financial collapse. Not like the housing bubble. The difference is Housing Market has so much debt underneath it, its much more dangerous if theres a correction. If equity markets drop its going to be painful for investors but theres so little debt relative to housing, it doesnt look like it has a risk leading to any kind of financial crisis. So our job is let the markets adjust. I think you and all your friends, janet yellen and co might get bailed out. You inflated asset with qe and zero, now tax reform and deregulation, the underlying economy might catch up. You could have gotten bailed out for staying at zero too long and actual underlying economy may grow into where youve inflated the assets. So you should thank donald trump. I hope that happens. You want to say that right now, thank you, mr. Trump. Ill just saying this, i have not yet changed my economic forecast. Thats common. Thats common. Youre going to do that. Have you seen neel, have you seen anything the animal spirits we talk about all the time where the market has gone where weve seen consumer confidence, where weve seen Small Business confidence . How do you kind of measure that . Well, we measure it a number of different ways. One way we measure it is whats happening on Inflation Expectations. After the election there was a bump. If you look where treasury prices went and backed out what underlying inflation expectation, there was a little bump but not to alarming levels. Were paying close attention to that. I also talked to my contact, other directors and business contacts around my region, is it translating to different activity on the ground . Are people making Investment Decisions based on this optimism . The feedback im getting is not yet. People are feeling good, they are optimistic but waiting and seeing. Im waiting and seeing, too. What does congress end up doing, what does the white house do . Then we will adjust our economic models based on the reality of that legislation. Neel, can i ask you, you persuaded me, ask you a question, if you examine all these things, are there other things we need to do to increase workforce, negative income tax, given thoughts to what other things need to be done to increase workplace participation . Well, i do think you mentioned i think earned income tax credit has proven to be an effective tool. People on both sides of the aisle generally like that. Anything we can do on education. Still huge education gaps. If you look at Unemployment Rate, Unemployment Rate is directly tied whether youre a High School Graduate or college graduate, et cetera, things on education. Of course Anything Congress can do around productivity growth. This is the big conundrum totally outside Federal Reserve is how do we get productivity growth again. As congress is debating their fiscal plans, anything they can do towards enforcement, education, productivity growth, that will be very good for americas longterm economic competitiveness. Neel kashkari, i want to thank you for joining us. Thanks. Thanks. Great to see you. See you again hopefully. Coming up stocks to watch. Later today dont miss an exclusive interview with another fed head, this one federal president Patrick Harker, join Steve Liesman, the aforementioned Steve Liesman squawk on the street. Stay tuned. Squawk will be right back. I love how usaa gives me the peace of mind and the security just like the marines did. At one point, i did change to a Different Company with car insurance, and i was not happy with the Customer Service. We have switched back over and we feel like were back home now. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children, and that they can be protected. Were the williams family, and were usaa members for life. Call usaa today to talk about your insurance needs. What we do every night is like something out of a strange dream except that the next morning it all makes sense. To power global ecommerce Fedex Networks are massive farreaching and, yes a little magical. 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Some stocks to watch this morning, or at least one, shake shack, the restaurant chain stock was upgraded to neutral from underperform at wedbush. The firm cites valuation and lowered expectations as the primary reasons for its move. Have you had a shake shack . You know, i never have. Have you . I have. I love it. Andrew swears by it. I ask the nasdaq for some bacon. You know, we would really like a shake shack for tomorrow. Like a shake shack couple of cheeseburgers. What do you think this is like i dont know. Theyre nice. Rub the lamp and the magic genie gives you your every wish . Youre empowering him, folks, be careful. And later today dont miss an interview with Philadelphia Fed president pat harker. Hell be joining the squawk on the street set at 9 40 eastern. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. 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Mad i was disparaging drunken sailors by comparing the last eight years, spending, i know. Senator, what should we be looking for . Our viewers care about whats happening with the markets, whats happening with the Business Community . Where do you think they will be getting from washington . I think the Health Care Debate is a really important one. I repeat it. I think the president s got to make when hes talking about this instead of rallying people who agree with him, hes got to make an effort to reach out to people who dont agree with him. Thats the only way youre going to get this thing done. What has to happen is rye kwan will struggle to get the votes he needs to pass it. Hell likely get it passed on thursday. It will go to the senate. It will move, politically speaking, to the left. And then theyll conference. But you pointed out the question then is can ryan get the votes when it comes back to the house. But nobodys going to say yes on the democratic side because their constituents are saying resist, resist, resist. Thats why i say the president has to reach out to those constituents. The constituents . Yeah. The people right now who dont like it are disagreeing with it. He keeps provoking. He keeps sticking his finger in their eye with tweets and other things theyre doing that makes it difficult for people. You saw what happened to sheldon whitehouse, about ran him out of rhode island for his vote. Whats happened is i believe strongly actually the president s got to be much more conciliatory to the people right now who are disagreeing with. But they didnt run him out of rhode island . Hes still there . Hes still there. That guy is he is a climate. Have you had the governor on . No. Sheldon whitehouse is you should have her on. Shes spectacular. What was she before . Weve eeither had her on or talked to her before. Another one on the other side is casey. You cant pigeon hole him either. He said we got to help those people in the shadows. He expanded medicaid. He did. I think in an altogether reasonable way. So did Mitch Daniels when he was governor. What about whats in the bill now about medicaid . Letting the states have a say. We have a tenth amendment that gives states lots of authority. I think giving states more authority is a smart thing to do. Off camera probably wont admit it now as former democratic senator, but you talked about how beneficial it can be to stay at home and not work. Oh, yeah. I think we have a number of things right now that make it easier for people not to work than to work. I think the more we can look thats why i was asking neel. The more expanded lower payroll tax, consider a negative income tax, anything that you can do thats minimally regulatory that increases the value of somebody going to work, the cash value of going to work this is not a popular position in your party right now. Its almost harrassy. The dignity work is what makes like worth living. I dont think its heresy. I think if you went to democrats and said what if we expanded the eitc, lowered payroll tax disabilities, food stamps. In order to look at paying for it you have to cut back on programs that encourage people to not work. So mistake by the current democratic party. Well, look you got to either come back in or talk to make some calls or something. Once youre out of the game, once youre on the sideline, im like you, just another loser on the sideline running my mouth. Well. Senator kerrey, thank you for being here with us this morning. As i said, good to see the good senator kerrey, make sure you join us tomorrow. Squawk on the street is next. Good monday morning. Welcome to squawk on the street. Im carl quintanilla, sara eisen and david faber as jim is off today. Supreme court nominee, russias influence and the u. S. Election, three fed speakers with kashkari on squawk a few moments ago, the tenyear dips below 2. 5 and oil remains on the offensive. Roadmap begins with major hearing t